SO1 Chapter 8 Reporting and Analyzing Receivables Identify the different types of receivables .

1. SO1 Chapter 8 Reporting and Analyzing ReceivablesIdentify the different types of receivables. ____ receivables include non trade receivables such as loans to company officers. Answer: Other

2. SO1 Chapter 8 Reporting and Analyzing ReceivablesIdentify the different types of receivables. Interest is usually associated with ___ receivable. Answer: notes

3. SO1 Chapter 8 Reporting and Analyzing ReceivablesIdentify the different types of receivables. Notes or accounts receivables that result from sales transactions are often called ___ receivables. Answer: trade

4. SO1 Chapter 8 Reporting and Analyzing ReceivablesIdentify the different types of receivables. The term ____ refers to amounts due from individuals or companies. Answer: receivables

5. SO2 Chapter 8 Reporting and Analyzing ReceivablesExplain how accounts receivable are recognized in the accounts. What are the three accounting issues associated with accounts receivable? Answer: Recognizing, valuing, and accelerating collections.

6. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. An aging of accounts receivable schedule is based on the premise that the longer the period an account remains unpaid, the ___ the probability that it will eventually be collected. Answer: lesser

7. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The _____ method of accounting for bad debts violates the matching principle. Answer: direct write-off

8. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Under the ____ method, no attempt is made to match bad debt expense to sales revenues in the same accounting period. Answer: direct write-off

9. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The account Allowance for Doubtful Accounts is classified as a(n) ______ account to Accounts Receivable. Answer: contra

10. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The ___ principle necessitates the recording of an estimated amount for bad debts. Answer: matching

11. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Under the allowance method, writing off an uncollectible account affects which financial statement? Answer: Only the balance sheet accounts

12. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The net amount expected to be received in cash from receivables is termed the ___ ___ value. Answer: cash realizable

13. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. If the amount of uncollectible account expense is understated at year end net Accounts Receivable will be ______. Answer: overstated

14. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The matching rule relates to credit losses by stating that bad debt expense should be recorded in the period of the ____. Answer: sale

15. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. When the allowance method is used to account for uncollectible accounts, Bad Debts Expense is debited when management estimates the amount of ______. Answer: uncollectibles.

16. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. When an account becomes uncollectible and must be written off ____ should be credited. Answer: Accounts Receivable

17. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The ________ method of accounting for uncollectible accounts is not generally accepted as a basis for estimating bad debts. Answer: direct write-off

18. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. An aging of a company’s accounts receivable indicates that $400 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $120 credit balance, the adjustment to record bad debts for the period would be what entry? Answer: Debit Bad Debts Expense $280 Credit Allowance for Doubtful Accounts $280

19. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. An alternative name for Bad Debts Expense is ______. Answer: Uncollectible Accounts Expense

20. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. What are the two methods of accounting for uncollectible accounts? Answer: Direct write-off and allowance methods

21. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Bad Debts Expense is reported on the Income Statement as an _____ expense. Answer: operating

22. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Allowance for Doubtful Accounts on the balance sheet is deducted from _________. Answer: Accounts Receivable

23. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. A customer has gone bankrupt and will not make any future payments. What is the journal entry using the allowance method? Answer: Debit Allowance for Doubtful Accounts Credit Accounts Receivable

24. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. When an account is written off using the allowance method, accounts receivable ____ and the allowance account ____. (decrease or increase) Answer: decreases, decreases

25. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Using the percentage of receivables method for recording bad debts expense, estimated uncollectible accounts are $2,500. If the balance of the Allowance for Doubtful Accounts is $800 debit before the adjustment, what is the amount of bad debt expense for that period? Answer: $3,300

26. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. Under the direct write-off method of accounting for uncollectible accounts, a specific account is decreased for the actual amount of bad debt at what time? Answer: Time of the write-off

27. SO3 Chapter 8 Reporting and Analyzing ReceivablesDescribe the methods used to account for bad debts. The balance of Allowance for Doubtful Accounts prior to making the adjusting entry to record Bad Debts Expense is relevant when using the _____ of receivables basis. Answer: percentage

28. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. When the due date of a note is stated in months, the time factor in computing interest is the number of months divided by _____. Answer: 12

29. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. Interest on a 6-month, 10 percent, $20,000 note is calculated by multiplying $20,000 X ____ X ____. Answer: .10 x 6/12

30. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. What is the basic formula for computing interest on an interest-bearing note? Answer: Face value of note X annual interest rate X time in terms of one year = Interest

31. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. Two key parties to a promissory note are the ____ and the payee. Answer: maker

32. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. When calculating interest on a promissory note with the maturity date stated in terms of days, the payee receives for interest if (360 or 365?) is used. Answer: 360

33. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. The interest on a $2,000, 6%, 90-day note receives is ____. Answer: $30

34. SO4 Chapter 8 Reporting and Analyzing ReceivablesCompute the interest on notes receivable. When a company receives an interest-bearing note receivable, what account will be debited? Answer: Notes Receivable for the face value of the note

35. SO5 Chapter 8 Reporting and Analyzing ReceivablesDescribe the entries to record the disposition of notes receivable. The maturity value of a $2,000, 6%, 60-day note receivable dated February 10th is _____. Answer: $2,020

36. SO5 Chapter 8 Reporting and Analyzing ReceivablesDescribe the entries to record the disposition of notes receivable. When a note is dishonored the payee’s entry includes a credit to ________. Answer: Notes Receivable

37. SO5 Chapter 8 Reporting and Analyzing ReceivablesDescribe the entries to record the disposition of notes receivable. A dishonored note is a note that is __ ___ in full at maturity. Answer: not paid

38. SO6 Chapter 8 Reporting and Analyzing ReceivablesExplain the statement presentation of receivables. Both the gross amount of receivables and the allowance for doubtful accounts should be reported in what financial statement? Answer: balance sheet

39. SO7 Chapter 8 Reporting and Analyzing ReceivablesDescribe the principles of sound accounts receivable management. If a company has a significant concentration of credit risk, it is required to discuss that in its ____ to its financial statements. Answer: notes

40. SO7 Chapter 8 Reporting and Analyzing ReceivablesDescribe the principles of sound accounts receivable management. A ________ is a threat of nonpayment from a single customer or class of customers that could adversely affect the financial health of the company. Answer: concentration of credit risk

41. SO7 Chapter 8 Reporting and Analyzing ReceivablesDescribe the principles of sound accounts receivable management. What are some principles of sound accounts receivable management? Answer: Determine to whom to extend credit, monitor collections, determine payment period.

42. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The ______ ratio is needed to calculate the average collection period in days. Answer: receivable turnover

43. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The receivables turnover ratio is computed by dividing what? Answer: Net credit sales by average receivables

44. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The receivable turnover ratio is used to analyze _____. Answer: liquidity

45. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. A (high or low?) receivable turnover ratio indicates customers are making payments very quickly. Answer: high

46. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The average collection period for receivables is computed by dividing 365 days by _______. Answer: receivables turnover ratio

47. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The financial statements of ABC Company reports net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the receivables turnover ratio for ABC? Answer: 6.7 times

48. SO8 Chapter 8 Reporting and Analyzing ReceivablesIdentify ratios to analyze a company’s receivables. The financial statements of ABC Company reports net sales of $400,000 and accounts receivable of $80,000 and $40,000 at the beginning of the year and end of year, respectively. What is the average collection period for accounts receivable in days? Answer: 59.7 times

49. SO9 Chapter 8 Reporting and Analyzing ReceivablesDescribe methods to accelerate the receipt of cash from receivables. The retailer considers VISA and MasterCard sales as ________. Answer: cash sales

50. SO9 Chapter 8 Reporting and Analyzing ReceivablesDescribe methods to accelerate the receipt of cash from receivables. A ____ buys receivables from businesses for a fee and collects the payment directly from customers. Answer: factor